Ambus Inc. manufactures a single product, Golder. Ambus uses budgets and standards in its planning and...

   

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Ambus Inc. manufactures a single product, Golder. Ambus uses budgets and standards in its planning and control functions. Ambus makes use of its standards in order to derive their budgeted cost per unit. For example, Exhibit A provides information on the budgeted variable costs per unit. When determining direct. material costs for the planning (master) budget income statement, the $4.80 budgeted material cost per unit of Golder would be used in the calculation. Exhibit A Raw material: 3.2 pounds at $1.50 per pound Direct labor: 0.75 direct labor hours at $20.00 per hour Variable overhead: 0.75 direct labor hours at $10.00 per hour Total variable budgeted (standard) cost per Golder Budgeted (Standard) Variable Costs Per Unit of Golder $ 4.80 15.00 7.50 $27.30 The standards for fixed manufacturing overhead costs are: 0.75 direct labor hours at $14.00 per direct labor hour. The standard fixed manufacturing overhead rate of $14.00 per hour is calculated based on a denominator level of activity of 36,000 direct labor hours. The planning budget income statement is based on the expectation of selling 30,000 units of Golder. The budgeted sales price is $58.00 per unit, and total budgeted fixed selling and administrative costs are $175,600. There are no variable selling and administrative costs in this firm. The company actually produced and sold 31,000 units this year. The company never has a beginning or ending finished goods inventory. Everything produced in the year is sold in that same year. The actual income statement for the year is provided in Exhibit B. Exhibit B Sales: 31,000 units at $62.00 Less Variable Costs: Direct materials Direct labor Variable manufacturing overhead Contribution margin Less Fixed Costs: Fixed manufacturing overhead costs Fixed selling and administrative costs Net operating income Ambus Inc. Actual Income Statement Exhibit C Actual production data and actual costs for the year are given in Exhibit C. Direct materials purchased and used: Direct labor: Variable overhead costs: Fixed overhead costs: Production. $1,922,000 137,448 515,160 290,000 979,392 516,000 180.200 $ 283.192 31,000 units 99,600 pounds at $1.38 per pound 24,300 direct labor hours at $21.20/hr. $290,000 $516,000 Prepare a detailed income statement variance analysis using the contribution approach income statement (i.e., variable costing basis) for the year (i.c.. compare the planning budget income statement with the flexible budget income statement and compare the flexible budget income statement with the actual income statement). Show all the activity, revenue, and spending variances appearing in the income statement analysis. A template for answering this question is given below. All variances should be marked with either an "F" for favorable or "U" for unfavorable. Ambus Variance Case Solution Template for Part 1 Sales Less V.C. DM DL V-OH CM Less FC Manufacturing Sell & Admin NOI Actual Results $$$ $$$ SSS SSS SSS S$$ SSS SSS Revenue & Spending Variances SSS SSS SSS SSS SSS SSS SSS. SSS Flexible Budget $$$ SSS SSS SSS SSS SSS Activity Variances SSS SSS $$$ $$$ $$$ SSS SSS SSS Master Budget $$$ $$$ $$$ $$$ $$$ $$$ SSS SSS 2. Prepare a very detailed manufacturing cost variance analysis (e.g., calculate the material price variance and quantity variance; the labor rate variance and efficiency variance; the variable overhead rate variance and efficiency variance; and the fixed manufacturing overhead budget variance and volume variance). All variances should be marked with either an "F" for favorable or "U" for unfavorable. Show your calculations. Ambus Inc. manufactures a single product, Golder. Ambus uses budgets and standards in its planning and control functions. Ambus makes use of its standards in order to derive their budgeted cost per unit. For example, Exhibit A provides information on the budgeted variable costs per unit. When determining direct. material costs for the planning (master) budget income statement, the $4.80 budgeted material cost per unit of Golder would be used in the calculation. Exhibit A Raw material: 3.2 pounds at $1.50 per pound Direct labor: 0.75 direct labor hours at $20.00 per hour Variable overhead: 0.75 direct labor hours at $10.00 per hour Total variable budgeted (standard) cost per Golder Budgeted (Standard) Variable Costs Per Unit of Golder $ 4.80 15.00 7.50 $27.30 The standards for fixed manufacturing overhead costs are: 0.75 direct labor hours at $14.00 per direct labor hour. The standard fixed manufacturing overhead rate of $14.00 per hour is calculated based on a denominator level of activity of 36,000 direct labor hours. The planning budget income statement is based on the expectation of selling 30,000 units of Golder. The budgeted sales price is $58.00 per unit, and total budgeted fixed selling and administrative costs are $175,600. There are no variable selling and administrative costs in this firm. The company actually produced and sold 31,000 units this year. The company never has a beginning or ending finished goods inventory. Everything produced in the year is sold in that same year. The actual income statement for the year is provided in Exhibit B. Exhibit B Sales: 31,000 units at $62.00 Less Variable Costs: Direct materials Direct labor Variable manufacturing overhead Contribution margin Less Fixed Costs: Fixed manufacturing overhead costs Fixed selling and administrative costs Net operating income Ambus Inc. Actual Income Statement Exhibit C Actual production data and actual costs for the year are given in Exhibit C. Direct materials purchased and used: Direct labor: Variable overhead costs: Fixed overhead costs: Production. $1,922,000 137,448 515,160 290,000 979,392 516,000 180.200 $ 283.192 31,000 units 99,600 pounds at $1.38 per pound 24,300 direct labor hours at $21.20/hr. $290,000 $516,000 Prepare a detailed income statement variance analysis using the contribution approach income statement (i.e., variable costing basis) for the year (i.c.. compare the planning budget income statement with the flexible budget income statement and compare the flexible budget income statement with the actual income statement). Show all the activity, revenue, and spending variances appearing in the income statement analysis. A template for answering this question is given below. All variances should be marked with either an "F" for favorable or "U" for unfavorable. Ambus Variance Case Solution Template for Part 1 Sales Less V.C. DM DL V-OH CM Less FC Manufacturing Sell & Admin NOI Actual Results $$$ $$$ SSS SSS SSS S$$ SSS SSS Revenue & Spending Variances SSS SSS SSS SSS SSS SSS SSS. SSS Flexible Budget $$$ SSS SSS SSS SSS SSS Activity Variances SSS SSS $$$ $$$ $$$ SSS SSS SSS Master Budget $$$ $$$ $$$ $$$ $$$ $$$ SSS SSS 2. Prepare a very detailed manufacturing cost variance analysis (e.g., calculate the material price variance and quantity variance; the labor rate variance and efficiency variance; the variable overhead rate variance and efficiency variance; and the fixed manufacturing overhead budget variance and volume variance). All variances should be marked with either an "F" for favorable or "U" for unfavorable. Show your calculations.

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1 Flexible Budget for Ambus Inc 31000 Units Sales 31000 units at 6200 1922000 Less Variable Costs Di... View the full answer